While listening to the November 8th 2007 testimony of Federal Reserve Chairman Ben Bernanke and the follow-on questions from members of the United States Senate and House of Representatives, Toomre Capital Markets LLC ("TCM") was very struck by a looming and incredibly important effect of the on-going sub-prime mortgage credit crisis. From the remarks of the Senators and Representatives, it is clear that the financial services industry is about to undergo one of its periodic periods of unpredictable political change driven by populist outrage.

It is virtually impossible to predict what might result from the messiness of the political process. However, with potentially millions (yes, millions!!!) of constituents losing their homes to the foreclosure process so that the eventual sale proceeds can be passed through to structured finance security interests, there will be changes. Perhaps the personal bankruptcy code might be changed again? Perhaps Congress might change after-the-fact some significant terms of the securitization process which depends either on timely payment of principal and interest or some cure of the underlying delinquency/default to make the security holders near whole? Perhaps the populist outcry may lead the political process to get into another of the Have's vis-à-vis Have not's battles?

Toomre Capital Markets LLC has no idea of where the populist outrage will lead. However, one thing is very clear: major change is afoot. The key implication for investors in the coming months is that liquidity and being able to be nimble will be key. Also, no doubt there will be sharp and dramatic moves as investors react to one or another political proposal, both in America and from overseas, particularly in the Far East. Hence, another key theme will be a pick-up in volatility and a need to perform enterprise risk management

on a real time basis. The value of embedded options in securities and derivative contracts are going to take on increased importance and no doubt another generation of portfolio managers and investors are going to be surprised by how quickly things can change.

Toomre Capital Markets LLC would suggest that a period of greater uncertainty lies ahead. How one manages money in such an environment or produce absolute return will change from how return has been created in the recent past. Just what those changes will be remains to be seen. However, there will be significant change. Reader thoughts and comments are welcome.